By Tuesday, August 30, Bitcoin and Ethereum recovered from some of the most recent price hits, sustained through the weekend. The positive Bitcoin news showed the digital asset was able to recover just above $20,000 after falling to as low as $19,500 a day prior. Ethereum has recovered by around 8% from its lows while BTC is up by about 3% as of today.
Reasons Behind Recent Lows
On Monday August 29 BTC and ETH were still trading at recent lows believed to be based largely behind the most recent speech delivered by Federal Reserve Chairman Jerome Powell on Friday, August 26. Chairman Powell addressed listeners at the Jackson Hole conference on Friday, where he delivered tough, but direct news about the thoughts and plans of the Federal Reserve to continue to combat elevated inflation experienced throughout the economy.
Chairman Powell started by expressing that the news would be a bit more difficult than some prior Jackson Hole addresses, but reassured that it is the job of the Federal Reserve to ensure price stability across all markets. The current plan to bring inflation to the desired mark of around 2% involves elevating interest rates which could certainly make things tougher on businesses, households and individuals. A softer labor market was also mentioned as a likely effect as well as slowed economic growth due to a higher cost of money.
Bitcoin And Ethereum Prices Fall As A Result
From the time when the announcement was delivered by Chairman Powell, the market responded by tightening its belt, as trade slowed and investors increased selling of Bitcoin and Ethereum, the two leading cryptocurrencies by market capitalization. Between the announcement on Friday to lows on Sunday, Bitcoin lost about 10% of its value while Ethereum was down as much as 17%.
The Tuesday recovery is said to reflect a level of returned stabilization among investor sentiment, but there is still one metric being watched closely as a speculative indicator. The open futures on Bitcoin and Ethereum have both reached all-time highs. This indicates potential increased volatility to soon affect the two largest digital assets in the world. When traders and investors write and exercise an increased number of futures in any market, it often means they plan to benefit from the volatility of the instruments.
Altcoins Strengthened On Tuesday
Ethereum is considered to be the leading altcoin, with the highest market capitalization next to Bitcoin, considered to be the original digital currency, and therefore not an altcoin by classification. With an 8% increase in price over the past 24 hours, ETH outperformed Bitcoin’s recovery of 3%.
Another altcoin which was watched closely after dropping to its lowest price since July 13, was the AVAX token from the Avalanche decentralized ecosystem. AVAX rose by as much as 13% from its recent lows by Tuesday, more than likely helping to settle investor sentiment during times when the stock market, housing markets, and other financial markets all experience difficulties as heightened interest rates are yet expected.